What is dynamic pricing?

Dynamic pricing is the practice of adjusting prices automatically and frequently in response to demand, inventory, timing, and competitor prices. Airlines, rideshare apps, and large e-commerce retailers are the classic examples, with prices sometimes changing many times a day.

The competitive input is central: most dynamic pricing engines ingest competitor price feeds and reprice against them within set guardrails. Even businesses that price statically feel its effects when a dynamically priced rival undercuts them during their highest-demand periods.